This is Part 1 of an adapted version of my essay on how to support left-behind areas to catch up that was shortlisted for the 2018 Bennett Prospect Prize. You can read all of last year’s shortlisted pieces here, and find out more about this year’s prize here.
There are few more pressing domestic issues than the unequal nature of economic growth. Whatever the true relationship between the economy and the Brexit vote, since 2016 there has been a greater focus than ever on those areas that have been ‘left behind’ by successive governments.
This focus is welcome, but often frustratingly fuzzy. Places are deemed to be left behind on the basis of a hunch, a stereotype, or a half-remembered visit. In many cases these will be correct — but they don’t give us a reliable basis to diagnose the issues, or to form policy.
If we don’t understand where is left behind, and the challenges those places face, we can’t realistically hope to improve things. And when it comes to economics, as in so much else, success breeds success and failure breeds failure.
What does it mean to be left behind?
Any definition of ‘left behind’ will be subjective, so I can at least be clear about what I mean. I’ve used ONS data on regional gross value added per head by local area (note — my analysis uses data that covers 1998–2016, although a more recent release goes up to 2017). Gross value added, or GVA, is a measure of the total value of goods or services produced in an area.
This data covers England, Wales, and Scotland, but I’ve only looked at England here; the next stage of my analysis uses a dataset that is collected differently by each nation.
In order to be classed as ‘left behind’ in my analysis in a given year, an area needs to meet two criteria:
- It is in the bottom 25% of English local authorities for GVA per head in that year; and
- It has been in the bottom 25% for at least seven of the last ten years.
Based on this, of 75 local authorities in England were left behind in 2016. Combined, these local authorities are home to more than eight million people; one in six people in England live in a left-behind place.
You can also see that these places aren’t evenly distributed. While no part of the country is without its left-behind pockets, around a third of local authorities in the north and the midlands are left behind, compared to one in seven in the south.
And of the left-behind places, two thirds of them have been in the bottom 25% for GVA per head for each of the last 19 years — as far back as the data goes.
In those 19 years, the gap has grown. Left-behind local authorities have, on average seen half the real-terms GVA-per-head growth than not left behind areas (13% compared to 26% between 1998–2016), and in that time the gap has increased by a third from £24,000 to £32,000 per head.
Remember too that places that are not left behind don’t just include thriving city centres but places like Southend and Pendle; the gap would be even starker if we compared the bottom 25% with the top 25%.
What are the challenges in these places?
A glance at the left-behind places also suggests that they face different challenges. Some have suffered since the decline of industrial jobs, others as holidaying patterns have changed. Others still seem to fit neither of those profiles, but are rural and remote.
To understand this more, I used the ONS’ indices of deprivation (this data is for 2015). This gives each area a score based on seven ‘domains’ of deprivation:
- Education, skills, and training
- Health deprivation and disability
- Barriers to housing and services
- Living environment
I’ve assumed that we can safely say a left-behind local authority has little problem with a domain if it’s in the top half of all English local authorities. This isn’t perfect, as a handful of left-behind LAs are in the top half for all domains, and it’s not necessarily the case that improving an area’s score in these domains will increase its GVA — but it seems like a good place to start. So what does this tell us about our left-behind places?
Only one local authority (the unfortunate Wyre Forest) falls into the bottom half of English LAs for all seven measures. A further 25 are in the bottom half for all but one. The most effective domain to improve would be, perhaps unsurprisingly, employment, but even this would leave nearly a quarter of areas untouched.
Even with the limitations of using the indices, this all seems to confirm the instinctive picture of left-behind places in England: they are very varied, and face varied combinations of challenges. There really is no silver bullet — an obvious point, but one that’s easily lost in the rush to hold up some new initiative as the key, whether it’s high-speed rail or investment in the NHS.
But while the varied nature of the challenges makes it harder to find a practical solution that works for all these places, it’s not hopeless. In my next post I’ll sketch what I see as the implications of this for policy, and set out some suggestions for a way forward.